The resurrection

Up is down. Dogs are cats. The world is nuts.

Thus it seems when you scope out the news. The virus is gaining momentum again, the latest US job numbers are weak and Covid is ripping through the White House. Yet markets are robust, stocks are romping higher, real estate is smoking and financial investors are doin’ just fine. That Apocalypse2020 dude is hitting the bottle and has moved under a bridge. Bears have gone into early hibernation. Prophets of doom, like Bay Street’s David Rosenberg and his cash-hoarding little disciples, are zeroes again. Whadda world.

In the last three days Trump got Covid, went on oxygen and has been seriously pickled by every drug cocktail and experimental remedy going. He may be doing unbelievably well. He might be seriously ill. He is rising from the swamp. The fog of misinformation is thick. But we know this: he put Secret Service guys at risk by insisting on doing a motorcade around his hospital on Sunday. His Rose Garden event for the new SCOTUS lady turned into a superspreader moment. The list of infected keeps growing, and now includes his pneumatic press secretary. He may not be able to do the next debate. It’s probable others around him will test positive. Apparently no contact tracing is being done. No masks were worn that day. No social distancing. Trump did events after his close aide, Hope Hicks, tested positive. Every single rule was broken.

So there you go. The manly, BSD approach to pandemic management failed. Chaos has ensured. Stocks go up.

Why?

First, a weak economy, lots of new layoffs, rising infections in 22 states and Trump’s medical problems pretty much ensure more government stimulus. Markets are betting Democrats and the White House can agree on a new package worth $1.5 trillion or more. Stimulus is a surrogate for economic growth, and investors feed off it. Up she goes.

Second, the bigger the mess around the president, the more people who are infected in his inner circle and the more uncertain his recovery the more Biden pulls ahead. Especially after that graceless debate. Markets like uncertainty, just as they hate the unknown. A closely-contested election taking weeks or months to sort out would be a confidence-killer as money stays on the sidelines and equities drop. So a clear-cut Biden win – looking increasingly likely as the White House turns into a quarantine zone – is bullish. Up she goes.

Source: FiveThirtyEight.com

“While many market participants are fretting over uncertainty and volatility that could result from a contested U.S. election, JPMorgan said the chances of a clear election result are rising,” Bloomberg reported on Monday. “Biden’s possible victory is often associated with concerns over higher corporate taxes, however, the strategists say that in light of the economic slowdown he’s likely to instead prioritize business recovery and jobs growth.”

“A potential Biden victory is unlikely to deliver significant tax increases, with these likely to be watered down, and additionally there could be a greater stimulus focus and consumer. Biden had made his tax-hike proposals in a very different world without the virus.”

Now, let’s hear from you. It’s been a while since this pathetic blog dipped into the gene pool. How do you see some of the factors around us shaping markets, real estate and the future?

Results tomorrow. No fighting allowed.

About the picture: Scott writes: “My brother shot the attached image in Picton on the main drag and I thought you might like (or use) it. He is a landscaper working on a big project for a hotel. He spent some time talking to a lot of small business owners there, who all seem to be saying that C19 and the government lockdown has screwed them. They’ve all decided to see it through to the end of the season, but even with the government assistance this year, many are not coming back next year. They’re done. So unfortunate for that town.” Indeed.